SmithREServices - Sacramento Commercial Real Estate & Investors Guide » Ten Things You Need to Know About Commercial Real Estate

Ten Things You Need to Know About Commercial Real Estate

12.26.2006

1. Most commercial “brokers” are not brokers. They call themselves brokers because they broker the deal, but many hold a Salesperson’s license, which actually makes them an agent. By law, a salesperson or agent must hang their license under a broker. A licensed broker can elect to put their license under another broker; however, a salesperson does not have the option.

2. Most “brokers” that work for commercial brokerages without a residential arm are not Realtors. A Realtor belongs to their local real estate board. Historically, the local and national real estate boards have done little to support commercial real estate, though that is changing. Consequently, commercial brokerage houses generally do not join the board of Realtors;

3. A title like Vice President generally means they have achieved a certain level of sales volume, not that they are managers of people;

4. Land is considered commercial real estate;

5. The license for a commercial salesperson or broker is the same as for a residential salesperson or broker. That means that anyone with a license can sell either commercial or residential. However, it is more common for a residential agent to sell commercial than the reverse. Commercial “brokers” understand that the two businesses are very different and would generally prefer to stay within their area of expertise;

6. Commercial “brokers” don’t generally see listings on the MLS because they are generally not members of the local board. The local real estate board generally governs the MLS, thus leaving commercial “brokers” out of that loop. The closest multiple listing services that we have are Loopnet and CCIM.Net, both of which are national organizations. However, it is not mandatory that “brokers” place their listings here so these services show only a fraction of what is available;

7. Commercial “brokers” have a network that residential agents and brokers do not generally have access to. It is important to learn what those networks are in your are;

8. Commercial “brokers” generally specialize in an area. They may do many different parts of the business, but there is typically one area that they know better than the rest. It is wise to work with a “broker” who knows the property type that you need assistance with;

9. Many of the designations in commercial real estate are from organizations that are affiliated with the National Association of Realtors (NAR), including CCIM and SIOR. IREM and ULI are also affiliates of NAR;

10. As a general rule of thumb, only about 50% of commercial deals that go into contract actually close. This is one reason that people complain that commercial “brokers” don’t return phone calls. “Brokers” are always weighing in on the probability of a closed transaction. If the caller knows little or nothing about what it takes to get a commercial deal closed, the “broker” would rather not invest the time.

If you would like to learn additional information about how commercial real estate works, go to www.SmithREServices.com and go to the Learn section to get registered today. There are several different courses to choose from.